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TEST YOUR UNDERSTANDING 3 [UP ADJUSTMENT]
Henry Ltd acquired 90% of the equity share capital of Sharon Ltd on 1 January 2017 when the retained earnings of Sharon Ltd were $5,000.Statements of financial position at 31 December 2018 were as follows:
HenryLtd SharonLtd
$000. $000. $000 $000
Non current assets
PPE 100 30
Invt in Sharon 34
134. 30.Current assets.
Inventory. 90 20
Receivables 110 25
Bank. 10 5
210 50
344. 80.Equity and Liabilities:
Capital and Reserves
Equity Share capital $1. 15 5
Retained earnings 159 31
174. 36.Non current liabilities. 120 28
Current liabilities
Payables 50 16
344. 80.During the year ended 31 December 2018 Sharon Ltd sold goods to Henry Ltd for $18,000 at a mark up of 50%. Two thirds remained in inventory at the year end.
The current accounts in Henry Ltd and Sharon Ltd stood at $22,000 on that day.
The Henry Ltd group uses the fair value method to value the non controlling interest. The fair value of the non controlling interest at acquisition was $4,000.
Prepare the consolidated statement of financial position for the Henry Ltd Group as at 31 December 2018.
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You must have an answer in the same book in which you found the question, and so ask about whatever it is in the answer that you are not clear about and then I will explain.
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(Also, do appreciate that you cannot be asked to prepare a full consolidated statement in the real exam. However, you can be asked for any extract from it and so you should be able to prepare the statement 🙂 )
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